Investing in the stock market is the opposite of the slot machine If you play correctly, then it doesn’t matter how lucky you are. Basically, it all boils down to your investing strategy and whether you can stick to it. The “bottom up” approach to investing is one of the most widely used to make investors lots of money, and in the next few paragraphs you will learn everything you need to succeed.
First off, what is the “bottom up” approach, exactly? Well, it’s the theory that you should invest based on the quality of the companies themselves over the global trends in the economy. This means that nothing is more important than how your individual company is doing.
The profit a company makes and therefore your earnings are absolutely limited by only one thing: the company itself! All other factors, such as global economic trends, don’t matter if your company is making a profit. There are three main advantages to choosing this type of strategy. First, you are more likely to invest in big money makers, which most often dominate a market where the economic trend is lax.
Second, you aren’t fooled by analysts with apocalyptic messages into selling your shares, because as long as you have information about your company, you can rest at ease. Third, researching companies to make smart stock options is a lot easier than tying to analyze the trend of every single company in its sector! This means that you can make better decisions about when to buy or sell because you are much better informed, instead of just relying on the price of the stock.
Critics of this market strategy say that economic conditions can put a large barrier on the company in question, and that unfavorable market conditions will slow a company regardless of how well structured it is. The quick, and popular, check to this is to incorporate a little of both into your strategy As part of your research on a company, check every once in a while how efficient they would be in their sector and place that inside your internal progress report. This way, you won’t be caught off guard and still capture the best of both worlds!
Overall, investing in the stock market will only be as profitable as you are willing to acquire information. Choosing this “bottom up” strategy relies heavily on good decisions coming from good research on your company. Without a good knowledge base you can’t make good decisions, and this strategy is designed to optimize that. At the end of the day, only the well informed succeed on Wall Street.